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:check: Chapter 2: National income accounting (Households & firms…
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Chapter 2: National income accounting
National income and product accounts
Various components of national income and output
Compiled by ministry of finance
Gross-Domestic Product (GDP)
Total market value of all final goods and services
produced within a country
by factors of production
within a given period.
4 parts
Produced within a country
In a given time period
Final goods and services
Produced for final use
For
consumer
Intermediate goods
Use in further processing
Value added
Difference between the value of goods as they leave a stage if production.
(Eg. From apple to apple juice)
Market Value
Measure the value of production, which also equals
total expendinture on final goods and total income
In calculating GDP. Take the value of final sales
Exclusion of Used goods and Paper transaction
Second had GDP.
Old output is not counted in current GDP.
Financial transaction GDP
does not count
Gross National Profit
Total market value of final goods and services produced within a given period by factors of production owned by a
country's citizens, regardless of where the output is produced
.
Households & firms
Factor markets
Entrepreneurship receives
profit
Pay
wages
for labor,
Interest
use of capital &
Rent
use of land
Known as
Y
.
Y=Income/Output
Goods market
C=Consumption of household. I=Investment for firms
Government
Known as
G
.
Financial transfers are not part of the circular flow of expenditure and income.
Rest of the world